REORGANIZATION
AND
STOCK PURCHASE AGREEMENT
by and between
TMI Holdings, Inc.
a Florida corporation,
on the one hand
and
Kina'ole, Inc.
a Hawaii corporation
and its Shareholders
on the other hand
REORGANIZATION AND STOCK PURCHASE AGREEMENT
REORGANIZATION AND STOCK PURCHASE AGREEMENT ("Agreement"), dated January
31, 2003, by and among TMI Holdings, Inc., a Florida corporation ("TMI"), on the
one hand, and Kina 'Ole, Inc., a Hawaiian corporation ("KINA'OLE") and Xx.
Xxxxxxx X. Xxxxxxxx ("SESSIONS") and Xx. Xxxx X. Xxxxxx ("XXXXXX"), who are the
only shareholders of KINA'OLE (each a "Shareholder" and collectively the
"Shareholders"), on the other hand. Each of TMI, KINA'OLE, and the Shareholders
shall be referred to herein as a "Party" and collectively as the "Parties."
W I T N E S S E T H
WHEREAS, the Shareholders collectively own 100% of the issued and out-
standing common stock of KINA'OLE as set forth in Exhibit A attached hereto
(the "KINA'OLE Shares");
WHEREAS, the Shareholders desire to sell and TMI desires to purchase all of
the KINA'OLE Shares in accordance with the terms set forth herein;
WHEREAS, the Parties desire and intend that the transactions contemplated
by this Agreement will be a tax free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the premises and respective mutual
agreements, covenants, representations and warranties herein contained, it is
agreed between the parties hereto as follows:
ARTICLE 1
SALE AND PURCHASE OF THE KINA'OLE SHARES
1.1 Sale of the KINA'OLE Shares. At the Closing, subject to the terms
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and conditions herein set forth, and on the basis of the representations,
warranties and agreements herein contained, the Shareholders shall sell to TMI
and TMI shall purchase from the Shareholders, all of the KINA'OLE Shares. TMI
shall pay to Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxx, the only Shareholders, as
consideration for the receipt of the KINA'OLE Shares, an aggregate of Five
Hundred Thousand (500,000) shares of TMI Series B Convertible Preferred stock
(the "TMI Shares"). The TMI Shares will be split 250,000 to SESSIONS and
250,000 to XXXXXX.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of KINA'OLE and The Shareholders. To
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induce TMI to enter into this Agreement and to consummate the transactions
contemplated hereby, KINA'OLE and the Shareholders represent and warrant, as of
the date hereof and as of the Closing, as follows:
2.1.1 Authority of KINA'OLE and The Shareholders. KINA'OLE and the
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Shareholders have the full right, power and authority to enter into this
Agreement and to carry out and consummate the transactions contemplated herein.
This Agreement constitutes the legal, valid and binding obligation of KINA'OLE
and the Shareholders.
2.1.2 Corporate Existence of KINA'OLE. KINA'OLE is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the state of
Hawaii. It has all requisite corporate power, franchises, licenses, permits and
authority to own its properties and assets and to carry on its business as it
has been and is being conducted. It is in good standing in each state, nation
or other jurisdiction wherein the character of the business transacted by it
makes such qualification necessary.
2.1.3 Capitalization of KINA'OLE. The authorized equity securities of
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KINA'OLE consist of 500,000 shares of common stock, no par value, of which
500,000 shares are issued and outstanding. No other shares of capital stock of
KINA'OLE are issued and outstanding. All of the issued and outstanding shares
have been duly and validly issued in accordance and compliance with all
applicable laws, rules and regulations and are fully paid and nonassessable.
There are no options, warrants, rights, calls, commitments, plans, contracts or
other agreements of any character granted or issued by KINA'OLE which provide
for the purchase, issuance or transfer of any shares of the capital stock of
KINA'OLE nor are there any outstanding securities granted or issued by KINA'OLE
that are convertible into any shares of the equity securities of KINA'OLE, and
none is authorized. KINA'OLE is not obligated or committed to purchase, redeem
or otherwise acquire any of its equity. All presently exercisable voting rights
in KINA'OLE are vested exclusively in its outstanding shares of common stock,
each share of which is entitled to one vote on every matter to come before it's
shareholders, and other than as may be contemplated by this Agreement, there are
no voting trusts or other voting arrangements with respect to any of KINA'OLE's
equity securities.
2.1.4 Subsidiaries. "Subsidiary" or "Subsidiaries" means all corpora-
------------
tions, trusts, partnerships, associations, joint ventures or other Persons, as
defined below, of which a corporation or any other Subsidiary of such
corporation owns not less than twenty percent (20%) of the voting securities or
other equity or of which such corporation or any other Subsidiary of such
corporation possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies, whether through ownership of voting
shares, management contracts or otherwise. "Person" means any individual,
corporation, trust, association, partnership, proprietorship, joint venture or
other entity. KINA'OLE does not have any subsidiaries.
2.1.5 Execution of Agreement. The execution and delivery of this
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Agreement does not, and the consummation of the transactions contemplated hereby
will not: (a) violate, conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any default or
acceleration upon notice or passage of time or both), in whole or in part, any
charter, article of incorporation, bylaw, mortgage, lien, deed of trust,
indenture, lease, agreement, instrument, order, injunction, decree, judgment,
law or any other restriction of any kind to which either KINA'OLE or the
Shareholders are a party or by which either of them or any of their properties
are bound; (b) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property or asset
(whether real, personal, mixed, tangible or intangible), right, contract,
agreement or business of KINA'OLE or the Shareholders; (c) violate any law, rule
or regulation of any federal or state regulatory agency; or (d) permit any
federal or state regulatory agency to impose any restrictions or limitations of
any nature on KINA'OLE or the Shareholders or any of their respective actions.
2.1.6 Taxes.
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2.1.6.1 All taxes, assessments, fees, penalties, interest and other
governmental charges with respect to KINA'OLE (or its subsidiaries) which have
become due and payable on the date hereof have been paid in full or adequately
reserved against by KINA'OLE, (including without limitation, income, property,
sales, use, franchise, capital stock, excise, added value, employees' income
withholding, social security and unemployment taxes), and all interest and
penalties thereon with respect to the periods then ended and for all periods
thereto;
2.1.6.2 There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the assessment of any tax or
deficiency against KINA'OLE, nor are there any actions, suits, proceedings,
investigations or claims now pending against KINA'OLE, nor are there any
actions, suits, proceedings, investigations or claims now pending against
KINA'OLE in respect of any tax or assessment, or any matters under discussion
with any federal, state, local or foreign authority relating to any taxes or
assessments, or any claims for additional taxes or assessments asserted by any
such authority, and there is no basis for the assertion of any additional taxes
or assessments against KINA'OLE; and
2.1.6.3 The consummation of the transactions contemplated by this
Agreement will not result in the imposition of any additional taxes on or
assessments against KINA'OLE.
2.1.7 Disputes and Litigation. There is no suit, action, litigation,
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proceeding, investigation, claim, complaint, or accusation pending, threatened
against or affecting KINA'OLE or any of its properties, assets or business or to
which KINA'OLE is a party, in any court or before any arbitrator of any kind or
before or by any governmental agency (including, without limitation, any
federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality), and there is no basis for such suit,
action, litigation, proceeding, investigation, claim, complaint, or accusation;
(b) there is no pending or threatened change in any environmental, zoning or
building laws, regulations or ordinances which affect or could affect KINA'OLE
or any of its properties, assets or businesses; and (c) there is no outstanding
order, writ, injunction, decree, judgment or award by any court, arbitrator
or governmental body against or affecting KINA'OLE or any of its properties,
assets or business. There is no litigation, proceeding, investigation, claim,
complaint or accusation, formal or informal, or arbitration pending, or any of
the aforesaid threatened, or any contingent liability which would give rise to
any right of indemnification or similar right on the part of any director or
officer of KINA'OLE or any such person's heirs, executors or administrators as
against KINA'OLE.
2.1.8 Compliance with laws. KINA'OLE has at all times been, and
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presently is, in full compliance with, and has not received notice of any
claimed violation of, any applicable federal, state, local, foreign and other
laws, rules and regulations. KINA'OLE has filed all returns, reports and other
documents and furnished all information required or requested by any federal,
state, local or foreign governmental agency and all such returns, reports,
documents and information are true and complete in all respects. All permits,
licenses, orders, franchises and approvals of all federal, state, local or
foreign governmental or regulatory bodies required of KINA'OLE for the conduct
of its business have been obtained, no violations are or have been recorded in
respect of any such permits, licenses, orders, franchises and approvals, and
there is no litigation, proceeding, investigation, arbitration, claim, complaint
or accusation, formal or informal, pending or threatened, which may revoke,
limit, or question the validity, sufficiency or continuance of any such
permit, license, order, franchise or approval. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all activities presently
carried on by KINA'OLE.
2.1.9 Guaranties. KINA'OLE has not guaranteed any dividend, obligation
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or indebtedness of any Person; nor has any Person guaranteed any dividend,
obligation or indebtedness of KINA'OLE.
2.1.10 Books and Records. KINA'OLE keeps its books, records and
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accounts (including, without limitation, those kept for financial reporting
purposes and for tax purposes) in accordance with good business practice and in
sufficient detail to reflect the transactions and dispositions of its assets,
liabilities and equities. The minute books of KINA'OLE contain records of its
shareholders' and directors' meetings and of action taken by such shareholders
and directors. The meeting of directors and shareholders referred to in such
minute books were duly called and held, and the resolutions appearing in such
minute books were duly adopted. The signatures appearing on all documents
contained in such minute books are the true signatures of the persons purporting
to have signed the same. A true and accurate list of KINA'OLE assets and
liabilities as of the Closing Date is attached hereto as Exhibit B. Further,
attached hereto as Exhibit C is a list of all contracts to which KINA'OLE is a
party or obligated, and KINA'OLE hereby represents and warrants that there are
no other material contracts or agreements in existence as of the Closing Date.
2.1.11 The Shareholders acknowledge that all of the TMI Shares will be
"restricted securities"(as such term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended ("Rule 144")), and will include the
restrictive legend set forth in Section 3.2 hereof, and, except as otherwise set
forth in this Agreement, that the shares cannot be sold for a period of at least
one year from the date of issuance unless registered with the United States
Securities and Exchange Commission ("SEC") and qualified by appropriate state
securities regulators, or unless the Shareholders obtain written consent
from TMI and otherwise comply with an exemption from such registration and
qualification (including, without limitation, compliance with Rule 144).
2.2 Representations and Warranties of TMI. To induce KINA'OLE and the
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Shareholders to enter into this Agreement and to consummate the transactions
contemplated hereby, TMI represents and warrants, as of the date hereof and as
of the Closing, as follows:
2.2.1 Corporate Existence and Authority of TMI. TMI is a corporation
------------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Florida. It has all requisite corporate power, franchises, licenses,
permits and authority to own its properties and assets and to carry on its
business as it has been and is being conducted. It is in good standing in each
state, nation or other jurisdiction in each state, nation or other jurisdiction
wherein the character of the business transacted by it makes such qualification
necessary.
2.2.2 Capitalization of TMI. The authorized equity securities of TMI
------------------------
consists of 1,500,000 shares of common stock, of which 189,631 shares are issued
and outstanding as of the date hereof, and 1,500,000 shares of preferred stock,
of which 250,000 shares are issued or outstanding as Series A Preferred Stock as
of the date hereof. No other shares of capital stock of TMI are issued and
outstanding. All of the issued and outstanding shares have been duly and
validly issued in accordance and compliance with all applicable laws, rules and
regulations and are fully paid and nonassessable. All presently exercisable
voting rights in TMI are vested exclusively in its outstanding shares of common
stock, each share of which is entitled to one vote on every matter to come
before it's shareholders, and in its shares of Series A Preferred Stock, each
share of which is entitled to ten votes on every matter that comes before it's
shareholders. Other than as may be contemplated by this Agreement, there are no
voting trusts or other voting arrangements with respect to any of TMI's equity
securities.
2.2.3 Subsidiaries. TMI currently has no subsidiaries.
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2.2.4 Execution of Agreement. The execution and delivery of this
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Agreement does not, and the consummation of the transactions contemplated hereby
will not: (a) violate, conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any default or
acceleration upon notice or passage of time or both), in whole or in part, any
charter, article of incorporation, bylaw, mortgage, lien, deed of trust,
indenture, lease, agreement, instrument, order, injunction, decree, judgment,
law or any other restriction of any kind to which TMI is a party or by which it
or any of its properties are bound; (b) result in the creation of any security
interest, lien, encumbrance, adverse claim, proscription or restriction on any
property or asset (whether real, personal, mixed, tangible or intangible),
right, contract, agreement or business of TMI; (c) violate any law, rule or
regulation of any federal or state regulatory agency; or (d) permit any federal
or state regulatory agency to impose any restrictions or limitations of any
nature on TMI or any of its actions.
2.2.5 Series B Preferred Stock. TMI will create a series of preferred
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stock entitled TMI Holdings, Inc. Series B Convertible Preferred Stock, with
500,000 shares authorized and the rights and preferences as outlined in the
Certificate of Designation attached hereto as Exhibit D. TMI will timely file
all documentation to effectuate the creation and issuance of the TMI Shares.
ARTICLE 3
CLOSING AND DELIVERY OF DOCUMENTS
3.1 Closing. The Closing shall be deemed to have occurred as of the
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date that each of the Parties hereto has executed this Agreement. Subsequent to
the Closing the following shall occur as a single integrated transaction:
3.2 Delivery by TMI:
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(a) TMI shall deliver to the Shareholders the TMI Shares, fully paid
and non-assessable and subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever, except as set forth in the legend on the certificate(s), which
legend shall provide as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPO-THECATED OR OTHERWISE
DISPOSED OF FOR A PERIOD OF ONE YEAR FROM THE ISSUANCE THEREOF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND ANY APPLICABLE STATE LAWS OR (ii) UPON THE EXPRESS
WRITTEN AGREEMENT OF THE COMPANY AND COMPLIANCE, TO THE EXTENT
APPLICABLE, WITH RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE
UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES).
(b) TMI shall deliver to KINA'OLE and the Shareholders written con-
firmation of the approval of the herein described transactions by TMI's Board
of Directors as set forth in Section 4.1 hereof.
(c) TMI shall deliver to the Shareholders written confirmation of
the approval of the creation and issuance of the TMI Shares with the rights and
preferences as described in the Certificate of Designation attached hereto as
Exhibit D.
3.3 Delivery by The Shareholders:
--------------------------------
(a) The Shareholders shall deliver to TMI the KINA'OLE Shares subject
to no liens, security interests, pledges, encumbrances, charges, restrictions,
demands or claims in any other party whatsoever.
ARTICLE 4
CONDITIONS, TERMINATION, AMENDMENT AND WAIVER
4.1 Conditions Precedent. This Agreement, and the transactions contem-
---------------------
plated hereby, shall be subject to the approval of the Board of Directors of
TMI, which shall be delivered at the Closing.
4.2 Termination. Notwithstanding anything to the contrary contained
------------
in this Agreement, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned only by the mutual consent of all of the
parties.
4.3 Waiver and Amendment. Any term, provision, covenant, represen-
-----------------------
tation, warranty or condition of this Agreement may be waived, but only by a
written instrument signed by the party entitled to the benefits thereof. The
failure or delay of any party at any time or times to require performance of any
provision hereof or to exercise its rights with respect to any provision hereof
shall in no manner operate as a waiver of or affect such party's right at a
later time to enforce the same. No waiver by any party of any condition, or of
the breach of any term, provision, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition or of the breach of any other term, provision,
covenant, representation or warranty. No modification or amendment of this
Agreement shall be valid and binding unless it be in writing and signed by all
parties hereto.
ARTICLE 5
COVENANTS
5.1 To induce TMI to enter into this Agreement and to consummate the
transactions contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made, KINA'OLE and the Shareholders covenant and
agree as follows:
5.1.1 Notices and Approvals. KINA'OLE and the Shareholders agree: (a)
----------------------
to give all notices to third parties which may be necessary or deemed desirable
by TMI in connection with this Agreement and the consummation of the
transactions contemplated hereby; (b) to use its best efforts to obtain all
federal and state governmental regulatory agency approvals, consents, permit,
authorizations, and orders necessary or deemed desirable by TMI in connection
with this Agreement and the consummation of the transaction contemplated hereby;
and (c) to use its best efforts to obtain all consents and authorizations of any
other third parties necessary or deemed desirable by TMI in connection with this
Agreement and the consummation of the transactions contemplated hereby.
5.1.2 Information for TMI's Statements and Applications. The Share-
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holders and KINA'OLE and their employees, accountants and attorneys shall
cooperate fully with TMI in the preparation of any statements or applications
made by TMI to any federal or state governmental regulatory agency in connection
with this Agreement and the transactions contemplated hereby and to furnish TMI
with all information concerning the Shareholders and KINA'OLE necessary or
deemed desirable by TMI for inclusion in such statements and applications,
including, without limitation, all requisite financial statements and schedules.
5.1.3 Access to Information. TMI, together with its appropriate
-----------------------
attorneys, agents and representatives, shall be permitted to make the full and
complete investigation of the Shareholders and KINA'OLE and have full access to
all of the books and records of the other during reasonable business hours.
Notwithstanding the foregoing, such parties shall treat all such information as
confidential and shall not disclose such information without the prior consent
of the other.
5.2 To induce KINA'OLE and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, and without
limiting any covenant, agreement, representation or warranty made, TMI covenants
and agrees as follows:
5.2.1 Access to Information. The Shareholders, together with their
-----------------------
appropriate attorneys, agents and representatives, shall be permitted to make
the full and complete investigation of TMI and have full access to all of the
books and records of the other during reasonable business hours. Notwith-
standing the foregoing, such parties shall treat all such information as
confidential and shall not disclose such information without the prior consent
of the other.
ARTICLE 6
MISCELLANEOUS
6.1 Expenses. Except as otherwise specifically provided for herein,
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whether or not the transactions contemplated hereby are consummated, each of the
parties hereto shall bear the cost of all fees and expenses relating to or
arising from its compliance with the various provisions of this Agreement and
such party's covenants to be performed hereunder, and except as otherwise
specifically provided for herein, each of the parties hereto agrees to pay all
of its own expenses (including, without limitation, attorneys and accountants'
fees and printing expenses) incurred in connection with this Agreement, the
transactions contemplated hereby, the negotiations leading to the same and the
preparations made for carrying the same into effect, and all such fees and
expenses of the parties hereto shall be paid prior to Closing.
6.2 Notices. Any notice, request, instruction or other document
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required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by hand delivery, overnight mail with a recognized carrier, or by
facsimile with facsimile confirmation, to the following addresses:
To TMI:
TMI Holdings, Inc.
0000 Xxxx'x Xxxxxx, Xxxxx 000-X
Xxxxx, XX 00000
Attn: President
with a copy to:
The Lebrecht Group, APLC
00000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Facsimile (000) 000-0000
To KINA'OLE or the Shareholders:
Kina Ole
0000 Xxxx'x Xxxxxx, Xxxxx 000-X
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx
0000 Xxxx'x Xxxxxx, Xxxxx 000-X
Xxxxx, XX 00000
Xxxx X. Xxxxxx
0000 Xxxx'x Xxxxxx, Xxxxx 000-X
Xxxxx, XX 00000
Notice shall be deemed to be given at the time of receipt of the notice by
the recipient. The persons and addresses set forth above may be changed from
time to time by a notice sent as stated in this Section.
6.3 Entire Agreement. This Agreement, together with the schedules
------------------
and exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto which is not embodied in this Agreement, or exhibits hereto or the
written statements, certificates, or other documents delivered pursuant hereto
or in connection with the transactions contemplated hereby, and no party hereto
shall be bound by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant or condition not so set forth.
6.4 Survival of Representations. All statements of fact (including
------------------------------
financial statements) contained in the schedules, the exhibits, the certificates
or any other instrument delivered by or on behalf of the parties hereto, or
in connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the respective party hereunder. All
representations, warranties, agreements, and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit at any
time made by or on behalf of the parties or of any information a party may have
in respect thereto. Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy existed.
6.5 Incorporated by Reference. All documents (including, without
----------------------------
limitation, all financial statements) delivered as part hereof or incident
hereto are incorporated as a part of this Agreement by reference.
6.6 Remedies Cumulative. No remedy herein conferred upon any Party is
---------------------
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
6.7 Execution of Additional Documents. Each party hereto shall make,
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execute, acknowledge and deliver such other instruments and documents, and take
all such other actions as may be reasonably required in order to effectuate the
purposes of this Agreement and to consummate the transactions contemplated
hereby.
6.8 Finders' and Related Fees. Each of the parties hereto is
-----------------------------
responsible for, and shall indemnify the other against, any claim by any third
party to a fee, commission, bonus or other remuneration arising by reason of any
services alleged to have been rendered to or at the instance of said party to
this Agreement with respect to this Agreement or to any of the transactions
contemplated hereby.
6.9 Governing Law. This Agreement has been negotiated and executed in
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the State of Hawaii and shall be construed and enforced in accordance with the
laws of such state.
6.10 Forum. Each of the parties hereto agrees that any action or suit
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which may be brought by any party hereto against any other party hereto in
connection with this Agreement or the transactions contemplated hereby may be
brought only in a federal or state court in Honolulu County, Hawaii.
6.11 Attorneys' Fees. Except as otherwise provided herein, if a
----------------
dispute should arise between the parties including, but not limited to
arbitration, the prevailing party shall be reimbursed by the non-prevailing
party for all reasonable expenses incurred in resolving such dispute, including
reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall
be a premium for result or for risk of loss under a contingency fee arrangement.
6.12 Binding Effect and Assignment. This Agreement shall inure to
---------------------------------
the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, legal representatives and assigns.
6.13 Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the date first written hereinabove.
"TMI" "KINA'OLE"
TMI HOLDINGS, INC. KINA'OLE, INC.
A FLORIDA CORPORATION A HAWAIIAN CORPORATION
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxx
------------------------------- -----------------------------
By: Xxxxxxx X. Xxxxxxxx By: Xxxx X. Xxxxxx
Its: President Its: President
"Shareholders"
/s/ Xxxxxxx X. Xxxxxxxx
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By: Xxxxxxx X. Xxxxxxxx, an individual
/s/ Xxxx X. Xxxxxx
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By: Xxxx X. Xxxxxx, an individual
EXHIBIT A
Shareholder No. of Kina'ole Shares
----------- -------------------------
Xxxxxxx X. Xxxxxxxx 250,000
Xxxx X. Xxxxxx 250,000
EXHIBIT B
ASSETS AND LIABILITIES OF KINA'OLE
AS OF THE DATE OF CLOSING
EXHIBIT C
CONTRACTS TO WHICH KINA'OLE
IS A PARTY OR IS OBLIGATED
1. Joint venture arrangement with Xxxxxx Xxxxxx, under with Xx. Xxxxxx
purchased the properties and Kina Ole is doing improvements and selling two
lot/house packages in exchange for a 20% commission from final sale proceeds
going to Kina Ole.
2. Joint venture arrangement with Xxxxxx and Xxxx Xxxxx, under which the
Davises own the property and Kina Ole is doing improvements and selling the
house in exchange for a commission from the final sale proceeds going to Kina
Ole.
3. On December 11, 2002, Kina Ole entered into three loans for a total
of $670,000. The loan agreements are with three investors, Xxxxxx Xxxxxxx
Xxxxxxx-Xxx, trustee of the Xxxxxx Xxxxxxx Xxxxxxx-Xxx Palmyra Trust dated
December 29,1995; Ainsley A. K. Xxxxxxx-Xxx, Trustee of the Ainsley A. K.
Xxxxxxx-Xxx Revocable Living Trust as amended dated April 30, 1992; and Xxxxxx
Xxxxxxx Xxxxxxx-Xxx, Trustee of The L.V.F.L. Family Trust, as amended and
restated, dated December 14, 2000. These loans become due June 11, 2003.
EXHIBIT D
CERTIFICATE OF DESIGNATION
OF THE RIGHTS, PREFERENCES, PRIVILEGES
AND RESTRICTIONS, WHICH HAVE NOT BEEN SET
FORTH IN THE CERTIFICATE OF INCORPORATION
OR IN ANY AMENDMENT THERETO,
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF
TMI HOLDINGS, INC.
(Pursuant to Section 607.0602 of the Florida Business Corporation Act)
The undersigned, Xxxxxxx X. Xxxxxxxx, does hereby certify that:
A. He is the duly elected and acting President of TMI Holdings, Inc., a
Florida Corporation (the "Corporation").
B. Pursuant to the Unanimous Written Consent of the Board of Directors
of the Corporation dated January 31, 2003, the Board of Directors duly adopted
the following resolutions:
WHEREAS, the Certificate of Incorporation of the Corporation authorizes a
class of stock designated as Preferred Stock, with a par value of $0.01 per
share (the "Preferred Class"), comprising one million five hundred thousand
(1,500,000) shares and provides that the Board of Directors of the Corporation
may fix the terms, including any dividend rights, dividend rates, conversion
rights, voting rights, rights and terms of any redemption, redemption,
redemption price or prices, and liquidation preferences, if any, of the
Preferred Class;
WHEREAS, the Board of Directors believes it in the best interests of the
Corporation to create a series of preferred stock consisting of 500,000 shares
and designated as the "Series B Convertible Preferred Stock" having certain
rights, preferences, privileges, restrictions and other matters relating to the
Series B Convertible Preferred Stock.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby fix
and determine the rights, preferences, privileges, restrictions and other
matters relating to the Series B Convertible Preferred Stock as follows:
1. Definitions. For purposes of this Certificate of Designation, the
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following definitions shall apply:
1.1 "Board" shall mean the Board of Directors of the Corporation.
1.2 "Corporation" shall mean TMI Holdings, Inc., a Florida Corporation.
1.3 "Common Stock" shall mean the Common Stock, $0.01 par value per
share, of the Corporation.
1.4 "Common Stock Dividend" shall mean a stock dividend declared and
paid on the Common Stock that is payable in shares of Common Stock.
1.5 "Distribution" shall mean the transfer of cash or property by the
Corporation to one or more of its stockholders without consideration, whether by
dividend or otherwise (except a dividend in shares of Corporation's stock).
1.6 "Original Issue Date" shall mean the date on which the first share
of Series B Convertible Preferred Stock is issued by the Corporation.
1.7 "Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock, $0.01 par value per share, of the Corporation.
1.8 "Subsidiary" shall mean any corporation or limited liability
Corporation of which at least fifty percent (50%) of the outstanding voting
stock or membership interests, as the case may be, is at the time owned directly
or indirectly by the Corporation or by one or more of such subsidiary
corporations.
2. Dividend Rights.
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2.1 In each calendar year, the holders of the then outstanding Series B
Convertible Preferred Stock shall be entitled to receive, when, as and if
declared by the Board, out of any funds and assets of the Corporation legally
available therefor, noncumulative dividends in an amount equal to any dividends
or other Distribution on the Common Stock in such calendar year (other than a
Common Stock Dividend); provided however, no dividend shall be declared or paid
when there is outstanding indebtedness of the Corporation or any accrued
interest remains outstanding on such indebtedness unless the holder of such debt
waives this condition. No dividends (other than a Common Stock Dividend) shall
be paid, and no Distribution shall be made, with respect to the Common Stock
unless dividends in such amount shall have been paid or declared and set apart
for payment to the holders of the Series B Convertible Preferred Stock
simultaneously. Dividends on the Series B Convertible Preferred Stock shall not
be mandatory or cumulative, and no rights or interest shall accrue to the
holders of the Series B Convertible Preferred Stock by reason of the fact that
the Corporation shall fail to declare or pay dividends on the Series B
Convertible Preferred Stock, except for such rights or interest that may arise
as a result of the Corporation paying a dividend or making a Distribution on the
Common Stock in violation of the terms of this Section 2.
2.2 Participation Rights. Dividends shall be declared pro rata on
the Common Stock and the Series B Convertible Preferred Stock on a pari passu
basis according to the number of shares of Common Stock held by such holders,
where each holder of shares of Series B Preferred Stock is to be treated for
this purpose as holding the number of shares of Common Stock to which the
holders thereof would be entitled if they converted their shares of Series B
Convertible Preferred Stock at the time of such dividend in accordance with
Section 4 hereof.
2.3 Non-Cash Dividends. Whenever a dividend or Distribution provided
for in this Section 2 shall be payable in property other than cash (other than a
Common Stock Dividend), the value of such dividend or Distribution shall be
deemed to be the fair market value of such property as determined in good faith
by the Board.
3. Liquidation Rights. The Series B Convertible Preferred Stock shall
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have the same liquidation preference as the Common Stock.
4. Conversion Rights.
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(a) Conversion of Preferred Stock. Each share of Series B Convertible
Preferred Stock shall be convertible into thirty (30) fully paid and non-
assessable shares of Common Stock of the Corporation. This conversion shall
occur automatically at the time the Corporation has sufficient shares of
authorized common stock to convert each share of Series B Convertible Preferred
Stock into thirty (30) shares of common stock. Notwithstanding the above, each
share of Series B Convertible Preferred Stock shall automatically be converted
into one fully paid and nonassessable share of Common Stock of the Corporation
described herein immediately upon the resignation or removal of the holder
thereof from the Corporation's Board of Directors.
(b) Procedures for Exercise of Conversion Rights. The shares of
Series B Convertible Preferred Stock will automatically convert to common stock
as soon as the Corporation has sufficient authorized shares of common stock to
convert the shares of Series B Convertible Preferred Stock in accordance with
Section 4(a), above. Once the Corporation has sufficient authorized common stock
to effectuate the conversion then the conversion shall be deemed to have been
effected on the date when the Corporation first had sufficient shares of
authorized common stock to effectuate the conversion (except that in the event
of an automatic conversion pursuant to Section 4(a) above, such conversion shall
be deemed to have been made immediately prior to the holders resignation or
removal), and such date is referred to herein as the "Conversion Date." As
promptly as practicable after the Conversion Date, the Corporation shall issue
and deliver to or upon the written order of such holder, at such office or other
place designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled and a
check for cash with respect to any fractional interest in a share of Common
Stock as provided in section 4(c) below. The holder shall be deemed to have
become a shareholder of record on the Conversion Date.
(c) No Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series B Convertible
Preferred Stock. If more than one share of Series B Convertible Preferred Stock
shall be surrendered for conversion at any one time by the same holder, the
number of full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of Series B Convertible
Preferred Stock so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of any shares of Series
B Convertible Preferred Stock, the Corporation shall pay a cash adjustment in
respect of such fractional interest equal to the fair market value of such
fractional interest as determined by the Corporation's Board of Directors.
(d) Payment of Taxes for Conversions. The Corporation shall pay
any and all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion pursuant hereto of Series B
Convertible Preferred Stock. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
the shares of Series B Convertible Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax, or
has established, to the satisfaction of the Corporation, that such tax has been
paid.
(e) Reservation of Common Stock. The Corporation will use its best
efforts, but is under no obligation, to keep available authorized but unissued
Common Stock for the purpose of effecting any requested conversion of the Series
B Convertible Preferred Stock.
(f) Registration or Listing of Shares of Common Stock. If any
shares of Common Stock to be reserved for the purpose of conversion of shares of
Series B Convertible Preferred Stock require registration or listing with, or
approval of, any governmental authority, stock exchange or other regulatory body
under any federal or state law or regulation or otherwise, before such shares
may be validly issued or delivered upon conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to secure such registration,
listing or approval, as the case may be.
(g) Status of Common Stock Issued Upon Conversion. All shares of
Common Stock which may be issued upon conversion of the shares of Series B
Convertible Preferred Stock will upon issuance by the Corporation be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof.
(h) Status of Converted Preferred Stock. In case any shares of
Series B Convertible Preferred Stock shall be converted pursuant to this Section
4, the shares so converted shall be canceled and shall not be issuable by the
Corporation.
5. Adjustment of Conversion Price.
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(a) General Provisions. In case, at any time after the date hereof,
of any capital reorganization, or any reclassification of the stock of the
Corporation (other than a change in par value or as a result of a stock dividend
or subdivision, split-up or combination of shares), or the consolidation
or merger of the Corporation with or into another person (other than a
consolidation or merger in which the Corporation is the continuing entity and
which does not result in any change in the Common Stock), or of the sale or
other disposition of all or substantially all the properties and assets of the
Corporation as an entirety to any other person, the shares of Series B
Convertible Preferred Stock shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible into the kind
and number of shares of stock or other securities or property of the Corporation
or of the entity resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold or otherwise
disposed to which such holder would have been entitled if immediately prior to
such reorganization, reclassification, consolidation, merger, sale or other
disposition it had converted its shares of Series B Convertible Preferred Stock
into Common Stock. The provisions of this Section 5(a) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales or
other dispositions.
(b) No Impairment. The Corporation will not, through any reorgani-
tion, transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, including amending this Certificate of
Designation, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of Series B
Convertible Preferred Stock against impairment. This provision shall not
restrict the Corporation from amending its Articles of Incorporation in
accordance with the General Corporation Law of the State of Florida and the
terms hereof.
7. Redemption. The Series B Convertible Preferred Stock shall not be
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redeemable.
8. Notices. Any notices required by the provisions of this Certificate
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of Designation to be given to the holders of shares of Series B Convertible
Redeemable Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, and addressed to each holder of record at its
address appearing on the books of the Corporation.
9. Voting Provisions. Each share of Series B Convertible Preferred
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Stock shall be entitled to thirty (30) votes on all matters to which the
shareholders of the Corporation are entitled or required to vote.
10. Restriction on Issuance. The Series B Convertible Preferred Stock
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may only be issued to and held by members of the Board of Directors of the
Corporation. In the event of any holder's resignation or removal from the Board,
the conversion provisions of Section 4 shall apply.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series B Convertible Preferred Stock to be duly executed by its
President and attested to by its Secretary this 31st day of January, 2003.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, President
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, Secretary
